DGAP-News: Report update on CPH Chemie + Papier Holding AG by Research Dynamics: Company Update (News mit Zusatzmaterial)

Report update on CPH Chemie + Papier Holding AG by Research Dynamics: Company Update (News mit Zusatzmaterial)

DGAP-News: Research Dynamics / Schlagwort(e): Research Update

Report update on CPH Chemie + Papier Holding AG by Research Dynamics:

Company Update (News mit Zusatzmaterial)

22.03.2016 / 17:30

Für den Inhalt der Mitteilung ist der Emittent verantwortlich.

---------------------------------------------------------------------------

Sale of Uetikon site to Canton of Zurich

Successful conclusion of lengthy negotiations

CPH Group had been in discussions about the future of its Uetikon site for

some time, not least due to the challenging situation of the

Switzerland-based manufacturing location for its Chemistry products. While

talks with the community of Uetikon for a mixed usage of the site failed

due to exaggerated demands from various interest groups within the

community as well as questions of competence over the lake bed adjacent to

the site close to a decade ago, CPH now was able to negotiate a good

solution for all parties involved. As the need for a new high school

("Kantonsschule") on the right side of Lake Zurich has mounted due to the

expected increasing number of students (+25% until 2027), the Canton of

Zurich has evaluated a number of possible sites. Uetikon now comes out as

the winning contender not least thanks to the well-developed location

approximately in the middle of the right Lake Zurich shore. As a result,

the Canton of Zurich is now purchasing 65,000 square metres of industrial

land from the CPH group for a total sales price of CHF 52 mn of which the

Canton will hold back CHF 32 mn for environmental clean-up of the site and

the adjacent lake bed.

Implications for CPH's Chemistry division

For a two-year period, CPH can continue with its current activities (R&D,

production and administration) on the site thanks to a lease-back contract

with the Canton. In the meantime, the Chemistry division is considering

relocation options for the manufacturing of molecular sieves,

chromatography gels and deuterated solvents. The fertilizer production will

be ceased in the medium-term, affecting 11 positions. Financially,

deducting the environmental clean-up costs from the sales price, the

resulting difference of CHF 20 mn fully covers write downs and all other

costs. As these costs have not yet been quantified by the company, we leave

our estimates unchanged for the moment. While revenues should be less

affected by the move, there still should be a positive impact on the

results line in 2016. As such, we would expect that the Group can generate

a net profit in 2016 in the single-digit range (vs. our current estimate of

a net loss of CHF 4 mn).

Strategically sensible move

While the sale of land that was at the origins of the company's foundation

in 1818 may have been an emotionally engaging process for the family, who

stills own 49.9% of CPH through UBV Uetikon Betriebs- und Verwaltungs AG,

we believe it is the most sensible solution given the current market

environment. The step opens up options to relocate manufacturing to more

competitive locations, also bringing products closer to customers. As such,

the Chemistry division recently concluded the acquisition of China-based

ALSIO, creating new production capacities for molecular sieves. While

during the transition phase some of the orders may be processed by the US

facility in Louisville, KY, we expect that after the closure of the Uetikon

site foreseen in two years period the Chemistry division will be serving

the European and Asian markets mostly out of China. Ultimately, we expect

this to be positive for margins in the medium to long term.

Valuation

Since the group operates in three different divisions with no synergies

between them, we have prepared a different set of industry peers for each

of CPH's divisions. We have employed three parameters - EV/EBITDA, P/S and

P/E - to analyse the relative valuation of the group. Initially, we have

calculated the peer average of CPH's individual divisions, and then taken a

weighted average of these based on the sales contribution of the respective

division. Given its diversified business model, this consolidated peer

average is most comparable to CPH's valuation multiples. CPH currently

trades at a P/S multiple of 0.5x (FY2016E), a significant 38% discount over

the weighted average of division peers. On a 3-year historical P/S basis,

CPH is trading at a premium of 6%. However, on a 2016E EV/EBITDA basis, CPH

is trading at a premium of 21% to its product peers.

+++++

Zusatzmaterial zur Meldung:

Dokument: http://n.eqs.com/c/fncls.ssp?u=WPNBDUAAMO

Dokumenttitel: CPH_Uetikon_Sale_22_March_2016

---------------------------------------------------------------------------

22.03.2016 Veröffentlichung einer Corporate News/Finanznachricht,

übermittelt durch DGAP - ein Service der EQS Group AG.

Für den Inhalt der Mitteilung ist der Emittent / Herausgeber verantwortlich.

Die DGAP Distributionsservices umfassen gesetzliche Meldepflichten,

Corporate News/Finanznachrichten und Pressemitteilungen.

Medienarchiv unter http://www.dgap-medientreff.de und http://www.dgap.de

---------------------------------------------------------------------------

447917 22.03.2016